There have been mixed reviews of the Bush speech of last evening. Even from the Palestinian Authority there were those who praised the speech, such as NabilShaath, and other, such as SaebArikat, who denounced the speech. In Israel, the Minister of the Environment, TzahiHanegbi suggested giving Bush membership in the Likud and even Avigdor Leiberman praised the speech. Obviously, there was enough in the speech for even the harshest of adversaries to find something to agree with. On the up side, there is no doubt about the commitment of the Bush Administration to the two-State solution. No prior US Administration has made such a clear statement regarding the creation of a Palestinian State. The speech also talked about the need to end the occupation and that the basis of the future peace agreements must be UN Resolution 242.

On the down side, other than stating that a Palestinian state should exist in three years time, there was no real time frame put in place. In fact, the speech contained no operative component at all. There was no mention of a regional or international peace conference. There were no immediate plans for any real US intervention with regard to what is happening on the ground today. Israel has completely reoccupied the West Bank and there was no mention of that at all.

What did come across most strongly and will probably be the main focus of headlines around the world, was the Bush call to the Palestinian people to get rid of Arafat and the Palestinian Authority leaders of today. Bush dressed this call in very strong sentiments about the need for real Palestinian democracy. One could hardly argue that point. The Palestinian people certainly deserve real democracy and I have been on the record more than once that all the people of the region deserve better leaders than we have now (if you can call our leaders "leaders" at all). But let’s look at this issue a bit more in depth: Arafat has already announced that there will be elections for the Palestinian Parliament and the Palestinian Presidency in the beginning of 2003. This is very important and in general should be viewed as a positive development. However, with the current state of affairs on the ground in Palestine with the continuation of the Israeli occupation and the majority support within the Palestinian public for suicide bombers, the election campaign will most likely be waged as a contest to see who is more anti-Israel and anti-peace rather than who is most conciliatory. In this atmosphere the most popular Palestinian politicians are likely to be those who are the most extreme. The mostly likely outcome of elections will hardly be good news for the chances of real peace in the region.

It is very unlikely that a serious contender will run against Arafat for President. Arafat will come with a new mandate from the Palestinian people and then what will Bush and Sharon say? What will happen is Hamas and Jihad have a majority of seats in the Palestinian Parliament? If there is no real move towards peace and an end to the occupation and terrorism months prior to elections, the process of holding elections will be disastrous for any future peace process in the years to come.

The Bush speech didn’t provide any help for breaking the current deadlock. There is little reason to believe that the situation on the ground will change in any significant way. As I have been saying since the beginning of the intifada in September 2000, without any mechanism for breaking the cycle of violence, meaning real political incentives, there will be no end. The violence, counter-violence, or terrorism and response cycle only leads towards escalation. There can be periods of escalation and short periods of relative calm, but each new round of violence can only be greater escalation. That is the situation today, and it will continue. There is always the chance that the major catastrophe will also happen – the mega-terror attack killing hundreds or more, or the Israeli "accident" of the kind that happened in Lebanon in the "Grapes of Wrath" – these are the types of events that the US is most afraid of – because they could result in the destabilization of the entire region, beginning with Egypt and Jordan. But in the meantime, it seems that the daily killings of several Israelis and Palestinians (now on the 1:2 ratio) is "acceptable" and doesn’t warrant any real US intervention, in the eyes of Washington. Only when the entire region is heading in the downwards spin will we be likely to see real US intervention.

Right now, the Israelis realized that the pessimists were right and it took the Palestinians less than 2 months to reconstruct the terrorism infrastructure. I have always claimed that there is a fundamental misunderstanding of what an infrastructure of terrorism consists of. Apparently the "experts" in the Israeli security forces believe that terrorism infrastructure consists of bomb laboratories, ammunition, guns, bombs, etc. With over 1000 sites on the internet instructing how to build bombs and with a free supply of many household products and chemicals openly available that could be used to construct explosive materials, the physical infrastructure that the Israelis forces are working so hard to destroy should hardly be the main focus. Somewhere along the lines of security thinking and analysis, it appears that someone forgot or overlooked the fact that the real infrastructure of any terrorism is the human infrastructure. Given the current situation, that human infrastructure has only grown. There is a reverse correlation working here – the harder the Israelis hit the stronger the human infrastructure of Palestinians willing to turn themselves into walking bombs. There is no shortage on the Palestinian side of those who are willing to kill themselves if they can take a lot of Israelis along with them. In this sense the Israeli policies are a complete failure and they are doomed to continue to fail.

The magic solution of a wall, a fence, ditches and crocodiles may make it more difficult for suicide bombers to reach their final destination, but it will in no way put an end to it, in fact, it is likely to increase the motivation of suicide bombers – and as the Zionist movement knows very well – when there is a will there is a way.

So now Israel has reoccupied the territories that were once called Area "A" or those areas under full Palestinian control. There is no such thing today. Borrowing from Oslo, we can say that today all the territories are classified as Area "B" meaning that the Palestinians are responsible for civil control – or providing for the needs of the population but have no security control. The difference between Area "B" of yesteryear and Area "B" of today is that the Palestinian Authority is basically non-existent. There are no real police forces – so crime is rampant (even open selling of weapons on the streets of the West Bank), there are no social services – the PA has no money, taxes are not being paid or collected, the hospitals are running out of supplies, basically no Ministry is functioning as it should. In addition, most Palestinians cannot leave their homes because not only is there a closure, meaning they can’t leave their towns, there is also a curfew – keeping people locked up in the homes for days at a time with brief periods to go and get some food and supplies. Commerce has stopped, transport of goods has ended, there are no Palestinian laborers in Israel. There is no investment and unemployment is much more common than employment. This situation is clearly not sustainable and the major explosion of mass Palestinian unrest is just around the corner.

Under these circumstances, many Palestinians are saying that the Palestinian Authority should hand over the "keys" to Israel and resign. If the occupation has returned, then Israel must take full responsibility for it. There are even those who say openly that the very existence of the Palestinian Authority under conditions of occupation is collaboration with the occupation – it facilitates and makes the occupation easier for the Israelis.

So as I usually try to do, I will offer some constructive suggestions of where I think we should be heading. I am often asked "if you were Prime Minister what would you do?" Well I obviously don’t have all the answers, but I have some. I know and I agree that violence should not be rewarded and that giving into terrorism is the surest recipe to guarantee that there will be more terrorism. On the other hand, it is absolutely necessary for everyone to know what the "end game" is. I would certainly declare that the State of Israel agrees to a peaceful solution through the creation of a Palestinian state next to Israel on the basis of the June 4, 1967 borders, with a shared capital in Jerusalem. I would talk about open borders with free trade and zones of cooperation along the "green line" rather than fences, trenches and walls. I would stress that Israeli settlements would be removed and would serve as the basis of the solution for the Palestinian refugees that must be resolved within the Palestinian State. I would talk about cooperation to create a safe and healthy environment, to provide all with equal and equitable shares of water, to develop the economies of both peoples for their mutual benefit and prosperity. And I would say that all of this could be implemented once there was a complete cessation of hostilities, violence and terrorism.

An Israel member of our Israeli-Palestinian economics working group recently submitted a plan for us to advance that also laid down some immediate steps that should be taken. These steps neatly combine explicitly elements of the Mitchell Report and the Tenet plan, giving those two initiatives more detail and turning them into something that could serve as real incentives. These are those recommendations:

Memorandum of Understanding Between The State of Israel and the Palestinian Authority

The two sides commit themselves to a complete cessation of all acts of aggression within one week of the signing of this MOU.

One week following the coming into effect of the cessation of violence, normal economic activities between the sides will be resumed on the basis of the spirit of the Paris Protocol of 1994.

There will be a gradual entry of 20,000 Palestinian laborers from Gaza and the West Bank to Israel. Vehicles for the transport of imports and exports will resume their ability to travel freely between the West Bank, Gaza and Israel, with the appropriate security measures.

Israeli businessmen will be allowed to enter the PA areas with the appropriate security measures.

VIP movement through the safe passage will be resumed.

The northern safe passage route for commerce will be resumed.

There will be a reduction of 50% in the charges for transport of goods between the sides.

Factories located in the border industrial estates will be allowed to import and export freely in the factories vehicles with the appropriate security measures.

Israeli Purchase taxes for goods sold in the PA areas will be removed by Israel.

Israel will release to the PA the VAT and customs moneys held and the PA will pay off its debts to Israeli institutions and suppliers.

Potential foreign investors will be allowed to freely enter the PA areas with minimal capital and without the need of a relative in Palestine.

The building of the sea port in Gaza and the Gaza International Airport will resume.

Joint ventures will resume including sea water desalination projects and tourism projects.

It is the responsibility of the PA to assure that those with permits to enter Israel will not engage in terrorism, smuggling of weapons, etc.

The PA is committed to and will collect illegal weapons in its territory according to the Oslo Agreements.

Both sides agree to reframe from incitement against the other in the media and will publicly encourage peaceful coexistence between the two peoples.

Following three months of cessation of all violence and the resumption of normal economic activities, the final status negotiations between the sides will resume from the place when there ended in December 2000.

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